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06/09/2003

Solid First Quarter Does Little to Boost PC Market Outlook, According to IDC

FRAMINGHAM, MA – JUNE 9, 2003 – Worldwide PC shipments reached almost 35 million units in the first quarter of 2003 with a value of $42.2 billion. Year-on-year shipment growth of 3% in the first quarter was slightly better than expected, although limited economic improvement and the outbreak of SARS are reducing expectations for the second half of the year. Total shipments for 2003 are now expected to reach 145.2 million on growth of 6.3%, followed by growth of 10.3% in 2004. Total shipment value is expected to decline 2.4% in 2003 to $169 billion, followed by growth of 3.5% in 2004.

"PC demand remains limited despite improvements from last year," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. "We've seen only limited recovery in business shipments while consumer growth has slowed in recent quarters and public sector shipments are falling. Growing consumer and business confidence as well as system replacements will boost growth in the second half of the year, but we won't see double digit growth until 2004."

"Enterprise purchasing in the United States slowed somewhat in the first quarter," said Roger Kay, vice president of Client Computing at IDC. "Nonetheless, we still expect moderate growth in upgrades this year across businesses of all sizes. Once under way, the refresh cycle should strengthen next year."

Regional Outlook:

United States – The U.S. PC market was stronger than expected in the first quarter due to a surprisingly resilient public sector. However, public sector spending is likely to fall sharply in coming quarters as the sector struggles with mounting budget pressures. Federal government spending should be stronger than state and local levels, and gains in business and consumer shipments should push growth into high single-digits by yearend.

Western Europe – The outlook for business PC shipments in Western Europe improved as the market recovered from flat shipments in the fourth quarter. Nevertheless, business investment remains limited and the consumer market continues to struggle. We expect limited improvement in 2003 with total growth of just 3.9%.

Japan – Despite steady gains in prior quarters, weak consumer confidence continues to undermine recovery in Japan. Rising public sector spending was not enough to offset weak consumer demand in the first quarter. Concern over consumer spending for the rest of the year has prompted IDC to lower shipment growth forecasts for 2003 to –1.2%.

Asia/Pacific – The outbreak of SARS had a limited impact on first quarter PC shipments, but is expected to dramatically reduce demand in the second quarter, particularly in retail outlets. Nevertheless, we expect SARS to have a limited effect in the second half of the year and some resurgence of demand to compensate for the slow second quarter.

U.S. and Worldwide PC Shipments and Growth, 2000-2004

Region 2000 2001 2002 2003* 2004*

USA Units (M)

Consumer 19.3 15.5 16.9 18.7 21.2

Commercial 32.7 30.5 30.7 31.4 34.2

Total 52.0 46.1 47.5 50.0 55.4

Worldwide Units (M)

Consumer 52.6 47.5 48.7 51.9 57.3

Commercial 87.5 87.0 87.8 93.3 102.8

Total 140.1 134.6 136.5 145.2 160.1

USA Growth (%)

Consumer -19.6% 8.5% 10.8% 13.5%

Commercial -6.6% 0.5% 2.3% 9.0%

Total -11.4% 3.2% 5.3% 10.7%

Worldwide Growth (%)

Consumer -9.7% 2.5% 6.5% 10.4%

Commercial -0.5% 0.9% 6.2% 10.2%

Total -4.0% 1.5% 6.3% 10.3%

* Forecast data

(Shipments are in millions of units)

Source: IDC, June 2003

IDC's Worldwide Quarterly PC Tracker gathers PC market data in 55 countries by vendor, form factor, brand, processor brand and speed, sales channel and user segment. The research includes historical and forecast trend analysis as well as price band and installed base data.

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at www.idc.com.

IDC is a division of IDG, the world's leading IT media, research, and exposition company.

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